Comparison of international commercial practices Incoterm 2010 and 2020 according to Vietnamese view

by Thu Huong

Today, LSX Lawfirm will give you an article about: “Comparison of international commercial practices Incoterm 2010 and 2020”, as follows:

Similar contents of two versions Incoterm of international commercial practices

The international commercial practice version Incoterm 2020 was born to inherit and promote the advantages of Incoterm 2010. Although it is superior and more suitable for the current context, Incoterm 2010 and 2020 still have similarities such as: after:

(i) Both versions of international trade practices have 07 terms of trade: EXW, FAS, FOB, CFR, CIF, CPT, CIP

(ii) You should apply watercraft for the following conditions: FAS, FOB, CFR, CIF

(iii) Applicable to all types of transport and multimodal transport with the following conditions: CPT, CIP, DDP

(iv) Neither Incoterms 2010 nor Incoterms 2020 are laws. The parties may apply it completely, or it may apply it in part. But when apply clearly stated in the foreign trade contract, other applicable conditions attached must necessarily be carefully described in the foreign trade contract.

(v) Both Incoterms will outline the responsibilities of the buyer and the seller to specify the relevant rules such as the division of risks, import and export procedures and modes of transport. load.

New features of Incoterm in 2020 compared to Incoterms in 2010

Change of responsibilities and obligations under CIP/CIF

CIP (Carriage and Insurance Paid to) and CIF (Cost-Insurance-Freight) require the seller to procure for the buyer a certain amount of insurance equivalent to term C (under the terms of insurance established by the London Insurance Association). promulgate). However, the two terms require different levels of coverage as the term often involves different types of goods.

The International Chamber of Commerce (ICC) has tried to clarify the difference in the version of international commercial practice Incoterms 2020 and increase the obligation to buy insurance for the seller’s shipment under two terms CIF and CIP. Accordingly, the CIP condition will increase in coverage to the A condition. The CIF condition will have similar coverage requirements (C term). Corresponding to this change, the buyer will receive additional benefits but will lead to an increase in insurance premiums.

Condition DAT converts to DPU

DPU (Delivery-at-Place Unloaded) will substitute for DAT (Delivered-at-terminal). This means that once the good unloaded on the means of transport at the named place of delivery. The seller will responsible for delivery and transfers the risk to the buyer. DPU is quite similar to DAP when it comes to adding unloading regulations.

Add “On-Board” option to FCA . condition

When transporting goods under FCA (Free Carrier), the seller and the buyer can agree. Thus, they require the presentation of the on-board bill of lading. Before that, the goods loaded on the ship for payment with the bank.

Security requirements

As far as transportation security is concerned, as mandatory screening of containers is becoming more and more common. These costs are included in shipping charges. Incoterm 2010 covered responsibilities for security requirements and related costs, but the 2020 version makes these obligations even more noticeable.

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What about the way seller/buyer using their own means of transport?

The parties can use their own means of transport when agreeing on terms of FCA, DPU, DAP and DDP. 
Incoterm 2010 assumes that the carriage of goods will be done by a third party. 
It does not address cases where the seller or the buyer uses their own vehicle, such as a truck. 
Incoterms 2020 clarifies this issue. 
For example, a buyer under FCA Incoterms 2020 is obliged to contract or arrange for the carriage of the goods from the named place at their own expense.

What about the difference that in the new version of Incoterm 2020?

Thus, we have clearly seen the difference that in the new version of Incoterm 2020, the seller can buy insurance up to ICC (A) and allows the parties to agree on the purchase of insurance at the highest level. While in Incoterms 2010, the seller only buys insurance at a minimum level of ICC (C) and allows the parties to agree to be able to buy at a higher level.

Contact LSX Lawfirm

Finally, hope this article is useful for you to answer the question about: “Comparison of international commercial practices Incoterm 2010 and 2020 according to Vietnamese view”. If you need any further information, please contact  LSX Law firm : +84846175333 or Email: hoangson@lsx.vn

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